Vonage, Sprint settle patent dustup for $80 million

Just a couple of weeks after a jury found Vonage infringed on a handful of …

Vonage and Sprint have announced that they have settled their patent dispute for $80 million. The agreement comes a little less than two weeks after a federal jury found that Vonage infringed on six patents held by Sprint, ordering the VoIP company to pay $69.5 million in damages plus 5 percent of future revenues.

Of the $80 million payout, $35 million covers past use of the patents, $40 million is for a "fully paid" license for future use of Sprint's IP, and $5 million is for prepayment of services. Vonage will also gain full access to Sprint's voice over packet (VOP) patent portfolio under the terms of the settlement. Sprint claims that its VOP portfolio contains over 100 patents covering various aspects of connecting telephone calls between traditional networks and the Internet.

"We are pleased to resolve our dispute with Sprint and enter into a productive future relationship," said Vonage general counsel Sharon O'Leary. "We believe this deal is good news for Vonage, our customers and our shareholders. It allows us to put this litigation behind us and continue to focus on our core business by removing the uncertainty of legal reviews and long term court action."

There's still a bit of uncertainty facing Vonage, however. The company is in the midst of appealing a $58 million verdict in a patent infringement case brought by Verizon. In that case, Vonage was found to have infringed three of Verizon's patents covering general concepts related to placing phone calls, some of which may not pass the Supreme Court's new standards for obviousness. Indeed, Vonage is making that very argument in its appeal.

The settlement with Sprint removes one potential cloud hovering over Vonage, although it comes at a hefty price. The $80 million payment is over one-quarter of the company's market cap. Despite that, the market is reacting favorably to news of the settlement, as Vonage's stock was up almost 75 percent as of publication.